You enter a car contest and suddenly you win! It seems too good to be true. You’ve been trying and you finally get it right. Now what? Can you say “tax”?
A car contest is among the most popular prizes to win. After all, who wouldn’t love to win a free car? Nothing like a new “ride”. Something to keep in mind when entering a car contest is the tax burden. Unfortunately, all winnings from a car contest or sweepstakes are considered a source of income. At least if you are a US resident, different rules may apply in other countries.
You are lucky enough to be the winner of the car contest among hundreds, if not thousands, of entries. Now you have a new car and it sounds great. However, a new car can be a nightmare if the winners don’t prepare for taxes. The amount you will owe depends on your circumstances, but you can estimate the taxes around 1/3 of the value of the prize. A $ 40,000 for $ 12,000 car is a great deal, but you still have to come up with the money to pay the taxes.
To get started, you need to find a good tax account. Whenever you win a large prize, such as a car contest or a cash amount, you should always consult with a tax professional. A CPA or accountant can provide advice tailored to your specific situation, which is vital to making sure you are properly prepared. Don’t hesitate or procrastinate, make sure you get an accountant right away.
Remember that the profit on your new car counts from the day you receive it, not from the date of your profit notification. Especially in the case of large prizes, such as a car from a car show or truck, it can take a long time to verify your prize and deliver your prize.
Here are your options: Can you get away from the car and wash your hands? Are you kidding me! Everybody is saying, “how could you get away from that?” Again, remember that you have to pay those taxes. So unless you have the tax money or you don’t keep the car. That is as crazy an option as it may sound to some people. We know that it does not seem correct that when you win you have to share it, but unfortunately you do.
Find out the fair market value (FMV) of any contest, sweepstakes prize, including a new car win. The fair market value could be much lower than the approximate retail value (ARV) indicated by the sponsor, especially if it takes time to take possession of the vehicle. Car values drop after new car models come out each year, so the model you won could be less expensive when you pick it up later that year. The moment a car is taken off the lot, the value immediately falls. Make sure your taxes are fair and accurate by finding the lowest fair market value possible.
You know the exact market value and exactly what it is worth and what the taxes will be. You still need to bring in a good chunk of change, but you don’t want to touch your savings that you’ve been working on for years.
The other option is to sell it. You better get away from him. Look at it this way, no matter what you can get, it’s all free money. Still, you will end up with several thousand dollars. The best thing to do is try to get the auto dealer you buy the car from to buy it back from you. You will most likely get the best rate. Just make sure you get the market value and don’t let them tell you otherwise. It’s new, it’s on your lot, you know, enough has been said. This way you end up with money in your pocket and taxes are paid. We highly recommend that you get the money and send it to pay taxes before you have time to think about it.
There are other possible options, like getting a tax loan, but that’s up to you. How much do you really like the car or would you like some extra money?
Below are some examples of car contests and giveaways. To learn more about these car contests, just do an online search.
Rotella car contest
Enter the Rotella Truck Giveaway for a chance to win a Ram 2500 ST Crew Cab 4 × 4 8 ‘Box valued at $ 36,000. Plus, you will receive $ 10,000 to help offset taxes! So go ahead and enter for a chance to win!
Jeep Wrangler Car Contest
Win a new modified Jeep Wrangler Unlimited and a trip to Las Vegas! Enter the 2013 Jeep Omix-ADA Sweepstakes for a chance to win a modified 4-door Jeep Wrangler Unlimited and a trip for two to the SEMA Show in Las Vegas, Nevada. This award includes one-way airfare for two and one night in a hotel and is valued at $ 46,000! Enter today for your chance to win!